1 month ago
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A BARGAIN chain with over 800 stores is set to be sold, reportedly placing a number of the high street shops’ branches at risk.
Poundland has hired advisory firm Teneo to oversee the sale of the popular discount chain, according to The Telegraph.
GettyPoundland is being put up for sale[/caption]
Sources close to the outlet claim loads of Poundland stores could be axed as part of the proposed sale.
A spokesman for Pepco Group, which is the parent company of Poundland, told the Telegraph: “As stated at our capital markets day on March 6, we are actively exploring separation options, including a potential sale, for the Poundland business.
“We have started to work with advisers to support us with this process.”
It comes after its Polish company Pepco said it was looking at “all strategic options” to separate Poundland from its brand.
The group said it might turn its focus to its more profitable businesses in Europe.
Pepco previously warned that upcoming hikes to employer National Insurance Contributions (NICs) and national minimum wage would significantly add to its costs.
Chancellor Rachel Reeves said during her autumn statement last year that she would raise employers’ National Insurance contributions (NICs) from 13.8% to 15%.
She also announced a reduction to the threshold at which businesses start paying NI contributions from £9,100 to £5,000.
It’s estimated that the move will raise £25billion – the equivalent of around £800 per employee for each firm.
Late last year it was revealed that profits at the firm also tumbled by £641million in the year to September, with bosses again blaming slow sales amid a poor outlook thanks to measures set out by Reeves.
A spokesperson also said the huge loss was “due to a non-cash impairment at Poundland that relates to the acquisition of the UK chain in 2016”.
This means the value of the business has decreased because of an expectation future cash flow will fall.
More recently, Poundland also saw revenue fall by 9.3% for the three months to December.
The firm is not the first business to warn of challenges because of Rachel Reeve’s Autumn Statement.
The move has been blasted by a number of high street stores, including Gregg’s, Sainsbury’s and Next and Halfords who said the move could force them to raise prices and further bruise the industry.
In January, Greggs raised the price of its popular sausage roll by 5p in response to higher wage costs from the budget.
TROUBLE AT THE BARGAIN CHAIN
Today’s development is indicative of the harsh retail climate which has plagued high streets up and down the UK in recent years.
Rising costs coupled with shoppers tightening their purse strings have placed pressure on businesses and damaged sales.
Bargain retailers such as Poundland, B&M and Home Bargains, have performed better than others thanks to their low price point, but this has created rivalry.
At the start of the year, Poundland said it would increase the number of items which cost £1 or less from around 1,500 to almost 2,400 to appeal to cash strapped shoppers.
The firm has also been battling a rise in theft, with hundreds of employees now wearing bodycams to help catch criminals.
RETAIL PAIN IN 2025
The British Retail Consortium has predicted that the Treasury's hike to employer NICs will cost the retail sector £2.3billion.
Research by the British Chambers of Commerce shows that more than half of companies plan to raise prices by early April.
A survey of more than 4,800 firms found that 55% expect prices to increase in the next three months, up from 39% in a similar poll conducted in the latter half of 2024.
Three-quarters of companies cited the cost of employing people as their primary financial pressure.
The Centre for Retail Research (CRR) has also warned that around 17,350 retail sites are expected to shut down this year.
It comes on the back of a tough 2024 when 13,000 shops closed their doors for good, already a 28% increase on the previous year.
Professor Joshua Bamfield, director of the CRR said: “The results for 2024 show that although the outcomes for store closures overall were not as poor as in either 2020 or 2022, they are still disconcerting, with worse set to come in 2025.”
Professor Bamfield has also warned of a bleak outlook for 2025, predicting that as many as 202,000 jobs could be lost in the sector.
“By increasing both the costs of running stores and the costs on each consumer’s household it is highly likely that we will see retail job losses eclipse the height of the pandemic in 2020.”
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